Dunelm to use Worldstores technology to drive digital growth

Homewares and furniture retailer Dunelm said today it is moving its core eCommerce business on to the Worldstores platform it acquired in 2016, which will improve its digital development capabilities.

Dunelm acquired Worldstores out of adminstration, and although acknowledging its business model was not sustainable which resulted in operations shutting down earlier this month, the technology infrastructure will be used to support Dunelm’s wider online proposition.

Commenting in the company’s final results announcement, which showed that group underlying pre-tax profit for the year to 30 June fell by 6.7% before exceptional items to £102 million, CEO Nick Wilkinson called Worldstores’ tech “a real asset”.

Dunelm reported a jump in group sales of 9.9% to £1.05 billion, but said the Worldstores integration into the business has had a significant impact on its bottom line. However, Wilkinson noted that the retailer is well advanced in a major programme to move the Dunelm.com website onto Worldstores’ superior platform, which he suggested will allow the company to launch click & collect, improved delivery options and other services “with much greater agility than has been possible whilst working with a third-party technology partner”.

Plans are in place to launch the new platform during the third quarter of the new financial year.

The CEO, who was Evans Cycles’ boss from 2011-2016 and only joined Dunelm in February this year, said the Worldstores acquisition has also advanced the digital talent within the group’s workforce. As a result of the businesses coming together, there has been a significant increase in the number of digital developers now employed by Dunelm, while it now also has access to a digital development centre in London.

“With the integration behind us, it is clear that Worldstores has created a new level of energy and focus in the business around digital growth,” explained Wilkinson.

“This will play a key role in driving Dunelm's growth for the foreseeable future.”

Worldstores was acquired from administration for a nominal sum in 2016, and Dunelm estimated the total cash outlay it will incur, which includes goodwill payments to suppliers, integration costs and trading losses, amounts to circa £30 million net of tax relief.

It was incurring losses of over £20 million per year, but Dunelm said it has now transferred around 15,000 profitable lines from Worldstores and its sister company Kiddicare to its own website. Kiddicare itself was closed at the start of the summer.

Tablet-based selling has been rolled out across it store estate to aid customer service in the physical retailing space, while Dunelm is committed to accelerating investment in its online performance marketing.

Wilkinson said the business is learning how best to get the most from a new CRM system, while looking at ways of generating more interaction through social media and user-generated content and imagery.

He admitted the UK retail environment remains “challenging”, but is confident in the new strategy.

"Following healthy sales growth over the past year, we are now taking steps to simplify the business under the core Dunelm brand, with one web platform and an integrated supply chain,” he commented.

“This will allow us to respond more quickly to the changing consumer environment and drive future profitable growth.”